Use the bright sparkle of hope the new year brings as an opportunity to improve your finances by making 3 smart money moves for 2015.

1. Create or Improve Your Budget

Yes, the B word. Embrace your reality and document your income and expenses. If you already have a budget, it’s time for a critical analysis of your numbers.

Some people’s budgets are so tight that they are only dealing with bare necessities for survival. Others may have loosey budgets that have an allowance for habitual non-necessities like restaurants, gifts and entertainment, yet they are not making more than the minimum payment on their credit cards. This is where it’s important to establish new habits to ensure that you are aggressively paying down debt and fully funding your retirement account.

Ask yourself these questions while you determine your budget.

Am I making aggressive debt payments before allowing spending on non-necessities?

Can I cut down my entertainment, gift giving, alcohol, restaurant or other non-essential spending?

Can I live in a less expensive situation or get a roomie to help with housing expenses?

Can I downsize my car or try alternative transportation?

Can I bring in more income?

Review your budget regularly to look for areas to cut spending so that money can be applied to paying off debt and saving for the future.

2. Get Out of Debt

Getting Out Of Debt. The abbreviation for that is GOOD. Actually, it’s Excellent. Remember that interest on debt is wasted money. This wasted money is the same money that could be used for savings, a retirement fund or essential items in your life. It’s common for entire debt amounts to be unnecessary such as the case of luxury purchases.

Another less discussed side effect of debt is that it can be a ‘monkey on your back’ or a huge weight carried around that can take it’s toll on personal power. Emotional distress, worry, lack of self-esteem, fear, hopelessness and other negative emotions are not unusual for those constantly carrying debt and can impact other areas of life such as relationships and career. Don’t let it happen.

Use the budget that you’ve established or improved in #1 as your roadmap. Understand that just making the minimum payment will waste money & extend the time period of making payments unnecessarily. Get creative, make cuts, change a living situation or do whatever makes sense for you to attack the debt like a pitbull.

3. Fully Fund Retirement Accounts

Fully funding your retirement accounts is so much more important than most people realize. The earlier you start and the more you contribute, the more amazing the results can be for your future financial security.

Is it possible to develop a million dollar nestegg? Run the numbers on an investment calculator to see what’s possible. If you start early enough & contribute the maximum amount throughout your career, you will be pleasantly surprised at the estimates. Market conditions will always have an impact, but the earlier one starts to invest, the better chances of coming out ahead over time despite market drops.

If your company provides a company match to a 401k plan, it becomes even more of a no-brainer to make the required contribution as that translates directly to ‘free money,’ ‘gratis green,’ and ‘do zero for the dough.’ Please don’t give up that opportunity.

Roth IRA’s are an excellent retirement vehicle with much more flexibility than traditional IRA’s and 401K’s. You always have the option of taking out the money that you contributed with no penalty.

Summary

If creating a budget, getting out of debt and fully funding your retirement plan feels impossible right now, just tackle what makes sense for your specific situation one step at a time.

Find out for yourself how good it feels to get a grip on your finances and your life. You may very well notice that you have more personal power, confidence and an amazing feeling of freedom. Celebrate each small victory. Be proud of your ability to establish new habits that will launch you into the world of financial security. Woof!